An instruction manual on how to save money

I recently ran into a little problem with a bank that didn’t want to play by the rules with my loan. When pointing out their error in a friendly manner didn’t help I got results by threatening them. Here is what happened to me and a guide on how to threaten your bank the proper way to get results.

A little background

A few years ago I got my mortgage through a mortgage broker. After the loan was originated I had no control over who the mortgage was sold to so it ended up being serviced by a big huge bank with lousy customer service. Unfortunately, I couldn’t put 20% down when the loan was originated so I had to get PMI. PMI stands for Private Mortgage Insurance and all you need to know about it is a it is a nasty little fee banks charge you when you have a conventional mortgage and don’t have a 20% down payment.

I have written several times about how I hate PMI (here , here, and here) but my dirty little secret is I have been paying PMI of $60 per month this whole time. So I worked hard to pay my loan down to 80% of my homes value and about a year ago I requested my bank remove PMI from my mortgage. Even though the law is clear, they refused to take the PMI off my mortgage. I meant to do something about it, but I procrastinated and never got around to it.

Now a year later, I tried again. This time I was ready for their dirty little tricks and was willing to fight them until they removed PMI from my mortgage like the law requires.

How to remove PMI

To remove PMI from your mortgage you have to do 2 things. First, you have to pay your mortgage down to 80% of the value of your home. Then you have to ask your bank to remove PMI. In my case, my bank’s website said I had to pay a $25 fee and send them a letter. The $25 fee is to pay for a Broker’s Price Opinion, or a BPO. A BPO is a mini appraisal to make sure the value of your home hasn’t gone down and your mortgage really is 80% or less of the value of your home.

The dirty tricks started immediately

Right away my bank tried coming up with excuses why they couldn’t get rid of the PMI on my account. The first dirty trick they tried is claiming that I needed to pay more money than what their PMI removal form said. They sent me an email saying I needed to pay more money than their form said I did and this is how I responded:

Obviously, this was a ridiculous idea on my part. Appealing to their sense of right and wrong? As if they had simply made some kind of mistake in illegally changing their fees without notice? I should have known this had no chance of working and as you might expect I received no reply.

How to threaten your bank

After a couple days of waiting for a reply that never came I finally wised up. The only way this big bang was going to respond was if I threatened them. So how do you threaten a bank? You have to know who the banks are scared of, which is the bank’s regulators. If your bank has “national” in its name it’s primary federal regulator is an organization called the OCC. Here is the OCC’s website where you can file a complaint on a bank.

If your bank has “state” in it’s name its primary federal regulator is either the FDIC (link to complaint center) or the Federal Reserve (link to complaint center). You could also contact your state’s department of banking.

No matter whether your bank is a state or a federal bank the Consumer Financial Protection Bureau (link to complaint center) is another organization your bank doesn’t want to mess with. There is no reason to limit yourself to complaining to just one organization, go ahead and tell your bank your going to file a complaint with all of them.

The first step in filing a complaint is to have the facts on your side. Being right always greatly helps your chances of winning an argument. If you are on the right side of the facts and your bank has broken rules to wrong you threatening them with regulator complaints will be highly effective. If your bank has treated you fairly all along your threats won’t do much. If your complaint is that your bank discriminates against pet owners because they have candy for kids at the drive through and not doggie treats then you probably won’t get what you want. The tellers will probably just laugh at you and then talk about you after you have gone home.

If you have the facts on your side there is a good chance you won’t have to actually file a complaint, just tell your bank you are going to. If you don’t get results immediately, then go ahead and file a bunch of complaints.

So instead of just asking my bank to do the right thing (ha!) I was going to have to threaten them. I sent them this second email:

That’s more like it. I pointed out why what they did was illegal and told them I had filed a compliant with the authorities. I lied about filing the complaint, I actually was going to give them a chance to correct their misdeed before I contacted anybody. I also lied about mailing the check for $75, but I don’t really remember why I did that.

As expected, this threat worked. After my first email got no response this email received a reply within an hour.

How nice of them. She had to go to her manager and get special permission to not break the law by changing fees without disclosing the change to customers. That’s OK though. I don’t care what kind of nonsense I have to go through, I just want my PMI gone and it looks like I am on my way.

Dirty trick number 2

So I successfully got through my bank’s first round of lies, but they weren’t about to stop at trying to cheat me after just one. A few weeks later I got this email:

Come on big bank, who do you think your dealing with? The old “We can’t find anybody who can do a BPO so please pay us a bunch of money and then we promise we will take away your PMI for real this time” trick is the oldest scam in the book and I wasn’t born yesterday. I’ve seen Nigerian scammers smoother than these guys.

Step number one is to make sure you have the facts on your side, so I did a quick google search and saw there were several people in my town who did BPOs. They had straight up lied to me. Apparently my bank was hoping I had never heard of google.

I’ll see your dirty trick number 2 and raise you threat number 2, bank.

I got a little confused and called the CFPB the CFNB, but they got the point.

I received this response back:

So removing PMI, which is required by law, apparently has to go to a manger to figure out what to do. That’s fine. As long as I don’t have to pay $60/month any more I am OK with that.

Success!

Several weeks later I got this in the mail.

WOOOO! I got the PMI taken off! I won!

Of course, it was a hollow victory. In the meantime my family and I decided to move to a new town, so I will only be enjoying lower payments for a couple months. But, that isn’t the point. The point is that I didn’t let the big bank cheat me and I made them follow the law! Even if it isn’t going to save me more than a few hundred dollars I was delighted with this encounter.